Report to the General Assembly (Published)

Document Title

A Feasible Proposal to Establish a Small Business Risk-Sharing Pool with Insurance Reforms to Improve Access and Moderate Rate Increases and an Evaluation of Options for Monitoring Costs and Rates of Health Insurance Carriers

Author

State Corporation Commission; Bureau of Insurance

Enabling Authority

SJR 181 (Regular Session, 1991)

Executive Summary

Senate Joint Resolution 181, adopted by the 1991 General Assembly, requested the State Corporation Commission's Bureau of Insurance (Bureau) to develop a feasible proposal to establish a small business risk-sharing pool with insurance reforms that would improve access to health care coverage and serve to moderate rate increases. The Bureau was also requested to evaluate options for monitoring the costs and rates of health insurance carriers.

Nearly 13% of all Virginians under age 65 do not have health insurance. Approximately 60% of these individuals are in families where the head of the house hold is employed. In Virginia, nearly 36% of all businesses do not offer health insurance to their employees. Approximately 41% of the small businesses with less than 26 employees do not offer health insurance. The majority of all businesses in Virginia (87%) have less than 20 employees.

Many of the problems in the small employer group market are caused by current market practices of insurers. Many carriers either do not accept small employers or charge premiums that small employers cannot afford to pay.

In accordance with Senate Joint Resolution 181, the State Corporation Commission's Bureau of Insurance, makes the following recommendations.

(1) The adoption of small group health insurance market reforms designed to increase access and improve affordability of health insurance for small employer groups,
(2) The establishment of a small employer group health insurance risk-sharing program, and
(3) The establishment of a small employer group health reinsurance association.

This report defines a small employer group to be an employer with at least two but less than 50 employees. The National Association of Insurance Commissioners (NAIC) considers a small group to be one with less than 26 employees as defined in a recent draft model act on small employer group health reform. Some carriers believe that it is the coverage of groups with less that 26 employees that is most in need of market reform. The bureau recognizes that the market for groups with less than 26 employees may be more in need of reform than the market for larger groups. However, there are groups employing between 26 and 50 persons that also experience difficulty obtaining and maintaining health coverage. It is because of those difficulties that this report defines a small group as one with at least two but less than 50 employees.